Employers are experiencing ongoing challenges related to group health insurance costs, especially as businesses move into 2026 and medical costs continue to rise. The pressure to offer competitive employee benefits must be balanced with the necessity of keeping costs low. Top-performing HR leaders in small to mid-sized businesses cannot afford to accept premium increases at the cost of their organization’s performance.
Instead, new methods and strategies are needed to lower costs while maintaining benefits plans that impress and retain top talent. This article aims to provide a roadmap for employers and insurance organizers to stay ahead of their competition in 2026 and beyond with the help of qualified employee benefits consultants.
Strategy #1: Recognize Health Cost Pressures in 2026
The first step toward creating proven strategies to lower costs is recognizing the pressures currently affecting today’s businesses. Employers experienced the highest projected increases in employee benefits costs in 15 years, with health costs expected to rise another 6.5% in 2026, prompting many to act quickly.
What is causing this cost pressure? Service costs rise naturally, but the prominence of new therapies and specialty drugs, advanced diagnostic requirements, and post-pandemic utilization have pushed them even further. Properly strategizing for these and even greater cost increases begins with recognizing these pressures as they relate to each workforce.
Strategy #2: Raise Deductibles and Copays
Raising deductibles and copays is a proven, though possibly oversimplified, way to maintain benefits while reducing cost pressures. High deductibles can impact business health costs in two ways: first, by lowering premiums, and second, by encouraging employees to be more cost-conscious about their health claims.
However, this method can backfire if deductibles and copays increase to a point that employees start to avoid necessary care. Preventative check-ups and labs, for example, often catch chronic illnesses early, leading to less expensive short-term treatments and preventing long-term expenses. This strategy should be balanced by free preventative services and chronic condition support to avoid imbalances between short-term savings and long-term costs.
Strategy #3: Adjust Plan Designs
Many HR leaders adjust plan designs to respond to these changes rather than increasing copays. Tiered plan networks can be more cost-efficient, but how do they work? This type of plan categorizes providers by tiers based on their projected costs and quality of care, and gives employees the choice to pay more or less for each tier. This allows employers to maintain high standards of care for those with urgent needs while offering healthy employees a less financially stressful option.
Strategy #4: Accelerate Case Management
Most HR leaders know that the small percentage of employees with high-cost claims account for much more of their company’s health spending than those with numerous lower-cost claims. Better case management processes can identify these high-cost individuals early to make sure they receive coordinated care within the company’s health system.
For example, employees with chronic illnesses such as cancer would benefit from proactive care coordination. The business’s long-term health costs would also benefit from providing treatment clarity to avoid unnecessary covered procedures and worsening symptoms.
Strategy #5: Measure Program Value and Performance
HR leaders and consultants should set clear, identifiable goals for their health plan savings. These goals should go beyond financial milestones to include long-term, proactive care standards such as improving preventive care rates, lowering avoidable ER visits, and making early diagnoses of chronic illnesses through covered check-ups, which can all reduce long-term care costs.
Strategy #6: Enhance Employee Engagement
Even well-conceived health benefits plans can fail to perform if employees don’t realize their benefits or use them well. Educating employees on their benefits, including the pros and cons of variable copays, options such as generic medications, and the benefits of preventative appointments, can help lower long-term costs through engagement.
Strategy #7: Support Informed Enrollment
Employee education should include informed enrollment, which means using plain language in benefits plans, offering digital support tools, and clearly estimating projected annual health costs under different plans. Increased education regarding plans often leads to increased employee satisfaction, boosting retention and plan utilization.
Strategy #8: Promote Cost-Effective Services
Services that prevent expensive care visits while protecting employee health and raising plan satisfaction can effectively raise plan ROI. Telehealth options, in-network providers, preventive screenings, and wellness programs can prevent costly emergency room visits in the long term.
For example, employers can create a culture of proactive health management that involves employees in their own care. To encourage employees to invest seriously in their health, offer support for employees trying to quit smoking, physical and mental relaxation services, chronic condition management, biometric screenings, and more. Employers cultivating a health-conscious work culture will see long-term cost benefits despite rising rates.
Consult Employee Benefits Professionals to Address Group Health Insurance Costs
Employers and HR leaders know that rising medication, treatment, and other care costs have caused employee benefits packages to skyrocket. These strategies can help clarify the way forward for employers and HR executives who must keep costs down while maintaining and improving their employees’ benefits packages.
At New City Insurance, we help businesses create sustainable employee care plans, including strategic plan deployment changes, employee education, and performance analytics. Contact our team of employee benefits consultants today to address rising insurance costs with proven strategies in 2026 and beyond.